Tag: Free Trade

It Takes a Village to Waste Money

For a time, it looked like Hillary Clinton might actually end up being the more conservative candidate in the race. Trump has been talking about restricting trade, blowing holes in the debt, opposing entitlement reform and expanding executive power.

Well, no longer. Apparently afraid that Bernie Sanders will bolt the Democratic Party for the Green (this tends to happen when you let people run who aren’t technically members of your party), she has now basically adopted Bernie Sander’s agenda in full.

  • She’s supporting the push for universal Pre-K, proposing a new bunch of subsidies and tax credits, doubling the size of the failed Head Start program and pushing for 12 weeks of mandatory paid leave. I’ve argued before the universal pre-K is a solution stumbling around in search of a problem and documented the complete failure of universal pre-K efforts. Clinton doesn’t care; there’s votes to be bought!
  • Clinton has now abandoned education reform in favor of more spending and more spending. There’s no evidence that this approach does anything but employ more union members. Clinton doesn’t care; there’s votes to be bought!
  • She’s now supporting a $15 minimum wage, a plank taken straight from Bernie Sanders. I’ve pointed out before that the push for $15 is a kind of mass insanity that has gripped the Left, only slightly more scientific than if the Republicans had responded to the Ebola epidemic with prayer. The cruelty of this is that it if the Democrats are wrong, it will not destroy their jobs, but the jobs for the people they purport to care for: the poor, the workings class, minorities, dropouts and convicted criminals trying to straighten out their lives. Clint doesn’t care; there’s votes to be bought!
  • She’s now embraced Bernie’s plan to massively inflate college tuition … uh … “make college more affordable“. As has been pointed out innumerable times, shoveling money at colleges will simply raises costs, increase debt and persuade more people to waste their time in college when they could be working or training. Clinton doesn’t care; there’s votes to be bought!
  • She’s now supporting creating a public option for Obamacare. Obama is now calling for this too, claiming the markets are not competitive enough. You have to admire the gall. First, the crush the insurance market with Obamacare. Then, they refuse to let insurance be sold across state lines. Then they propose a “public option” to bankrupt the insurance companies that remain. Every day, Obamacare looks more and more like a deliberate plan to destroy the private insurance market to create the “need” for socialized medicine. In this case, Clinton does care; there’s vote to bought!
  • She’s now turned not just against TPP but against free trade in general. Never mind that trade has made our country wealthy while almost eliminating poverty in other countries. Clinton doesn’t care; there’s votes to be bought!
  • All of this will be paid for with big tax hikes on “the rich”, who are close to maxed out. Clinton doesn’t care; there’s votes to be bought!

The $15 minimum wage is the issue for me with Democrats. It is so mindless, so stupid, so at variance with economics and so destructive to the future of the people it supposedly helps. If you wanted to create unemployment, make poverty more intractable and condemn a generation of people to lifelong unemployment and poverty, you’d be hard pressed to come up with a better plan than the $15 minimum wage.

I realize that a lot of liberal organizations don’t pay their interns or, in the case of groups like Ralph Nader’s, pay them sub-minimum wage through legal loopholes. But the University of California already fired 500 people to account for the minimum wage. Even the dumbest Democrat can do math. And Hillary Clinton is many things, but she’s not dumb. They must know, on some level, that this is going to be bad. They just Don’t. Fucking. Care.

But it’s worse. As McArdle points out in the link above, Clinton is proposing to pay for all this stuff with the usual litany of Democratic tax hikes: raising rates, eliminating the Social Security cap, closing the “carried interest” loophole, etc., etc. She’a also proposing to eliminate almost all tax deductions for the rich (which will produce 100+% marginal rate in some income brackets). But:

For while it is true that these programs are paid for, that doesn’t mean that the budget math is sound. The government’s spending capacity is, in the end, limited, and every dollar that you spend on one thing is a dollar that cannot be spent on something else. Virtually all of Clinton’s “pay fors” are concentrated on a relatively small number of affluent-to-rich people, and because of that, they represent a large cut of those incomes; if she managed to enact all of her plans, her top bracket would be inching close to a marginal tax rate of 50 percent before you factor in state and local taxes that can easily add another 10 percentage points to that figure.

Even if you think that it would be politically possible to extract taxes at those levels, and that you could do so without causing any unwanted economic side effects, the question remains: What do you do for an encore? After enacting Clinton’s agenda, America will still need to fix Medicare, Social Security, state and local pensions, the disability insurance program, and so forth. And given that Democrats have proven as unwilling as Republicans to raise taxes on the middle class, where are we going to get the money?

I’ve said this many times and I will keep repeating it until it sinks in: you can’t fund a welfare state by taxing the rich. There simply isn’t enough money. European welfare states aren’t funded by the rich. They’re funded with massive taxes on the middle class.

The United States has one of the most progressive tax systems in the world, being very reliant on the wealthy for revenue. The European welfare states, by contrast, are more regressive, having flatter taxes and relying on VATs and sales taxes that are regressive. They have to be that way because you simply can’t finance a welfare state by taxing the 1%.

A welfare state financed by the rich doesn’t even work politically. When everyone is paying taxes, there is more support for a welfare state because everyone is pitching in. The perception is that you’re getting out something related to what you paid in, which is why Social Security and Medicare are popular in this country (both financed by a regressive tax that is denounced by Democrats for not soaking the rich enough). But a system that is dependent on taxing the rich isn’t a welfare state, it’s a plunder state. And as I’ve pointed out before, most people don’t want that. They don’t want to feel like they’re living on someone else’s dime or on stolen property. The Communists discovered this 70 years ago when they tried to “redistribute” estates to the commoners only to discover that the commoners didn’t want that wealth if it was stolen.

But proposing to fund this garbage through a middle-class tax hikes would be political suicide. So — in a situation where we are already half a trillion in deficit, have $19 trillion in existing debt and have trillions of dollars in future unfunded liabilities — the Democrats are proposing to burn our last few sources of revenue on a series of brand new will-o’-the-wisp social spending programs.

(Yes, yes, we once had marginal tax rates of 70%. And we also had a huge number of exemptions. No one ever paid that rate. We are very close the practical limit on marginal rates.)

I understand why Clinton is selling out wholesale like this. She’s afraid Bernie on the Green Party ticket will wreck her chances. But I think this tells you how principled Hillary Clinton is. She has either completely changed her views on several major issues or she is going to betray her campaign promises the second she gets into office. I don’t think she actually cares either way. She just wants to be President. And if she has to wreck the economy to get there, well, she’ll wreck the economy to get there. This is way more of a sell-out to the party fringe than any Republican has ever made. But you won’t see it described as such because 98% of our media are going to vote for Clinton anyway.

This is worst election ever. Two rich leftists are battling to see who gets to the screw the country over and how badly they can screw us. And people wonder why I’ve voting for Johnson:

I will not vote for Trump. And I will not for Clinton. To hell with them both. The only election I really care about is Congress. It is absolutely critical that the Republicans hold onto Congress, preferably retaining a majority in both houses. Look at the agenda. Imagine the damage Clinton could do with a Democratic Congress. And then, whatever you may think of Trump, put that Republicans roadblock in her way.

The Party of Trump

Because I am a glutton for punishment, I watched the GOP debate last night. It was much more “substantive” with less personal attacks. But “substantive” is relative term when Donald Trump is on the stage. Debating Trump on substance is like debating a goldfish: by the time he gets to the end of an answer, he’s forgotten what he said at the beginning. He said Iraq was a mistake but he would send more tens of thousands of troops to hit ISIS. He bashed Democrats for doing nothing about Social Security and then promised not to touch Social Security. He called the Tiananmen Square protests “riots” and refused to denounce violence at his own rallies.

But I’m getting into the weeds. The thing that really jumped out from last night debate was this: the GOP is becoming the Party of Trump, regardless of whether he’s the actual nominee or not.

For example: all the candidates on stage inveighed against free trade. The GOP used to understand that free trade was good for this country. Ted Cruz occasionally tried to make that point again: that the US has few trade barriers and that our trade deals mostly open markets for us in other countries. But the Sanders-Trump axis has latched onto American’s discontent with the economy and persuaded them that free trade is the name of their pain and the reason jobs have gone away.

It isn’t. Most of our manufacturing job losses are because of automation. Unless Donald Trump plans to physically rip robots out of factory floors — not completely impossible — that’s not changing. The real way to boost the job market in America is to make it easier to do business in America. Simplify regulations that destroy hundreds of billions of dollars in productivity and millions of jobs. Overhaul the corporate tax code that is equally damaging. Other countries are doing this; we’re going in the opposite direction, piling regulation upon regulation and tax code upon tax code. End that. Make America a place where it’s easy to do business. And corporations will stampede to do business here.

Trade tariffs are not “protection”. They’re a tax. They make everything we buy more expensive and don’t relocate a single job into this country. But the GOP has abandoned this.

And that was just one issue. On immigration, on foreign policy, on torture, on criminal justice, all the candidates came off as Trump Lite. That’s a mistake. If the voters have a choice between Trump and Trump-Lite, they will go with Trump. But no one on that stage had the gravitas to push back against Trumpism.

Between these two parties, I am convinced that, regardless of who wins the election, we are headed for another lost economic decade. No one outside of Paul Ryan seems to understand how hard it is to do business in this country and how many millions of jobs and billions in wages our tax and regulatory system destroy. No one wants to stand against anti-immigrant and anti-trade hysteria. No one seems to understand that getting more involved in the Middle East is a mistake. No one seems to understand or care about the pending budget crisis. We are caught between one party that wants to blow up the debt with tax cuts and spending and another that wants to blow it up with more spending and more spending.

Maybe the GOP can recover if someone manages to beat Trump. But that’s looking less and less likely. Look, I’m tired and I’m getting over a cold. Maybe I’m being too pessimistic. But watching last night’s debate, desperately hoping to see something to hpoe for after the big government dumpster fire that was the last Democratic debate, I felt like I looked into the abyss. And the abyss tried to sell me steaks.

Update: Rubio’s people today are urging their voters in Ohio to support Kasich so that Trump won’t win Ohio. Kasich (and Cruz) have declined to reciprocate.

I must say, this really impresses me. Rubio is putting the party and the country ahead of himself. Bravo.